Page 1 of 3Making money from Kindle publishing

Today’s online markets are rather like icebergs, where page one of a Google search is the only visible part and everything else is drowned below the water line; it’s important to make sure your product sits on that visible tip. For iOS apps you need to be in the first eight iTunes results, and for Android apps you must be near the top of a smartphone screen. Understanding how each of these tech behemoths orders its search responses has become a crucial business skill.

Regular readers will know that I’ve been researching the factors that Apple and Google use to rank app results, but I’ve recently become fascinated by Amazon too. The device formerly called Kindle 3 (before being renamed Kindle Keyboard) really was a market changer. It launched in the UK in October 2010 at roughly half the price of its predecessor.

I pre-ordered mine and was so keen that I spent delivery day looking out for the courier. Within 30 minutes of loading my first book, I’d forgotten it was an ebook – it had totally changed my reading habits. Then, at a Kindle press conference in September, Amazon CEO Jeff Bezos revealed a statistic that set my business mind whirling.

Buyer's guide

But first, a little background: the Kindle Direct Publishing (KDP) programme allows authors to self-publish their books for the Kindle. It pays up to 70% royalties, and the process of submitting the book and having it appear worldwide takes a matter of hours. Which is all very nice, but I’m not interested in "vanity publishing" and have, until now, felt that if you couldn’t get someone else to print and distribute your book, and pay you to do it, then you weren’t much of an author.

There’s still some truth in this – mainstream publishers reject books not up to their quality level, while KDP applies no such filter and so will publish a good deal of dross. However, even good authors will struggle if traditional publishers consider the market for their work too small to support a sufficient print-run and marketing push. This was a point Bezos was keen to make, and he quoted from rejection letters received by Stephen King and Dr Seuss, among others. But then he dropped his bombshell: 27 out of the top 100 top-selling Kindle titles were self-published!

It could be a lucrative channel for small online businesses to exploit

Naturally I take figures such as this with a pinch of salt, and I did notice that all 27 appear to be fiction titles mostly aimed at the female market (I doubt my historical-fantasy novel of post-Roman Britain would trouble Kindle’s charts even if I could be bothered to write it). What it does demonstrate, though, is that the Kindle platform itself is no impediment to sales, which is a big deal since it democratises the publishing market in the same way that mobile app stores did for software development. In short, it could be a lucrative channel for small online businesses to exploit.

There’s nothing new about selling information online, and it’s still regarded by many naive newcomers as the best way to make money. However, the traditional methods rarely work nowadays because internet users expect a default price of zero. Even if you sidestep this prejudice by providing information that clearly isn’t available elsewhere in the public domain, you’ll still need to build proper marketing and payment platforms to profit from it.

But now the advent of ebook readers – the Kindle, in particular, has made such devices mainstream – has muddied the water to the potential benefit of sellers of information. For many people a Kindle publication is just as much a "book" as a paperback, and they expect books, even ebooks, to come at a price (in fact, price is regarded – especially for non-fiction – as a measure of quality just as it is in many other markets).

The essential difference between Amazon's ebook market and Apple's App Store is that in the latter, prices were driven to rock-bottom almost immediately, perhaps because there was no pre-existing model for comparison. The ebook, on the other hand, has a clear real-world equivalent that can be used to derive a sensible relative price. Given that the physical cost of storing and delivering an ebook is practically zero, customers expect Kindle version prices to be comparable to, but a bit cheaper than, their paperback equivalents.